Govt investigating recovery of student loan administration costs

Steven Joyce 5 May, 2010

Govt investigating recovery of student loan administration costs

The government is investigating changes to student loan administration fees as part of a package of measures that would see more of the tertiary education budget spent on student places.

\"If we take into account student allowances and the student loans we lend to students to pay for fees and living costs, we spend a total of 42% of our total tertiary budget on student support,\" says Tertiary Education Minister Steven Joyce.

In comparison, Australia spends about 31% of its tertiary budget that way and the OECD average is 19%.

Mr Joyce says a big reason is the way we handle our student loans. \"Taxpayers are currently writing off about 47 cents in every dollar that is advanced on a student loan. We remain committed to interest-free student loans but we are looking at a number of things at the margin that will promote equity and fairness between students and taxpayers.

\"They won\'t change the world but they will give us more funds to do more in the tertiary sector. Final decisions will be detailed in the Budget later this month.\"

Options currently being considered by the government include:

Focusing students on performance, by requiring them to pass at least half of their (full time) courses over two years to be able to keep borrowing from the scheme.

Introducing a lifetime limit of access to student loans for an undergraduate degree.

Requiring permanent residents and Australians to wait two years before they can access the student loan scheme.

Increasing and extending the administration fee for student loans to ensure it covers more of the actual costs of loan administration throughout the life of the loan.

Mr Joyce says these changes would result in savings which would then be recycled to make way for more student places in our universities and polytechs.

\"This is particularly important if we are to maintain this year\'s record number of student places.

\"The number of places available is currently scheduled to reduce next year in a plan signed off by the previous government before the global recession.

\"The changes we are looking at are about commonsense and fairness. It\'s sensible, for example, that borrowers should cover the cost of administering their loan - but the current administration fee covers about 20% of the costs and only applies while students are studying and drawing down their loan.